->On the debt bubble:
financial markets have overcome the "freezing up" caused by the summer's economic crisis in Russia to channel "an ample flow of capital to businesses and households."
("Ample flow of capital". I love that.)
->On the stock market bubble:
"I want to take a few moments this morning to discuss one key element behind our current prosperity--the rise in the value markets place on the capital assets of U.S. businesses. Lower inflation, greater competitiveness, and the flexibility and adaptability of our businesses have enabled them to take advantage of a rapid pace of technological change tomake our capital stock more productive and profitable. I will argue that the process of recognizing this greater value has produced capital gains in equity markets that have lowered the cost of investment in new plant and equipment and spurred consumption. "
(There is no bubble. the Nasdaq trades at over 100 P/E 'cuz we are so darned productive)
"...the remarkable generation of capital gains of recent years has resulted from the dramatic fall in inflation expectations and associated risk premiums, and broad advances in a wide variety of technologies that produced critical synergies in the 1990s."
(It's the internet. It changes everything, dude.)
->On indebtness to foreigners that helps keep the party going:
"The profitability of investment here has attracted saving from abroad, an attraction that has enabled us to finance a current account deficit while maintaining a strong dollar. Clearly, we use both domestic saving and imported financial capital in a highly efficient manner, apparently more efficiently than many, if not most, other major industrial countries."
->On the negative savings rate
"Arguably, the average household does not perceive that its saving has fallen off since 1992. In fact, the net worth of the average household has increased by nearly 50 percent since the end of 1992, well in excess of the gains of the previous six years. Households have been accumulating resources for retirement or for a rainy day, despite very low measured saving rates."
Party on, dudes. Greenspan says so.
-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique